All posts tagged Adair Turner

Bank of England Governor Mervyn King and his deputy Paul Tucker have appeared before the U.K. Government’s Treasury Select Committee to give evidence on the BoE’s June 2012 Financial Stability Report.

However, the pair were quizzed about their involvement in the Libor affair as lawmakers and regulators ramp up their probes into allegations that Barclays along with several other global banks rigged Libor rates over a period between 2005 and 2009 in an attempt to disguise high funding costs during the financial crisis.

Mr. Tucker had already given evidence about the Libor matter as part of the Committee’s investigation into dealings at Barclays. For Mr. King this was the first time he had been questioned about Libor since Barclays recently became embroiled in the affair.

Messrs King and Tucker appeared together with Adair Turner, Executive Chairman of the Financial Services Authority. Marietta Cauchi and other reporters live-blogged the hearing.

The British public is understandably outraged that no one at RBS has lost much of their wealth — nevermind seen the inside of a courtroom or prison — following the bank’s disastrous decision to purchase Dutch lender ABN Amro just as the financial crisis was gathering pace, and its subsequent need for a £45.5 billion taxpayer-funded bailout in 2008.

Taxpayers still hold 83% of the bank’s shares, a stake currently worth less than half of what they paid for it.

The report, by the soon-to-be-defunct Financial Services Authority, is a 450-page catalog of reckless decision-making, hubris and sloppy oversight by the regulator itself.

For an organization with the important task of reforming the global financial system–and one which is demanding greater transparency from the institutions that operate within it–the Financial Stability Board is remarkably coy about its own affairs. Its approach to disclosure resembles its namesake the FSB, the Russian state security apparatus that succeeded the KGB.

At issue is the secrecy around membership of the FSB’s steering committee, which was formed when the FSB was created by the G20 in April 2009. This committee acts as the organization’s moral authority in its efforts to encourage collaboration between the world’s governments, financial regulators and central banks.

The steering committee sits between the board’s chairman–Mario Draghi–and the full plenary of FSB members, an unwieldy college of 64 bodies drawn from 24 countries and international organizations including the European Commission and International Monetary Fund.

It is a powerful body. Appointed by Mr. Draghi, it provides “operational guidance” to the members of the FSB. In other words, it sets the agenda for the FSB’s work. So it is perhaps surprising that the membership of the committee is a secret. There are no details available on the FSB’s website, and a request for more information from the FSB last week yielded a blank Swiss response.

Traders can relax–they’re not the only people doing pointless jobs. Divorce lawyers, the makers of advertisements for cars and the manufacturers of very large handbags are among the many who are doing nothing to make the world a better place.

In the middle of last year the chairman of the U.K.’s Financial Services Authority upset many bankers by describing the jobs they did as “socially useless”.

A gulf appears to have opened between Europe’s politicians and its central bankers and regulators about limiting or banning sovereign credit default swap trading.

German Chancellor Angela Merkel and French President Nicolas Sarkozy blame speculators in the CDS market for worsening the Greek government’s financial woes, although it’s unclear how they think that’s been achieved.

Both want rules limiting the use of sovereign CDS, ideally agreed upon by all G20 nations. They also want the European Commission to investigate the role of speculators in the $36 trillion CDS market. On top of that, European Commission President Jose Manuel Barroso said the commission is mulling an outright ban on CDS trades.

But many regulators and central bankers are urging restraint, warning limits or bans would be complicated to enact and could leave companies and investors unable to hedge legitimate risks.

Sants, 54, says he never intended to stay in the job beyond the three years he originally signed up for. But this seems doubtful. In a profile in the Observer newspaper in March 2008, a former colleague says Sants’s ambition was always to run the FSA. [Read the article here.]

For sure, he joined at a difficult time. Less than a month after stepping into his dream role, the credit crunch bit and Northern Rock was forced to go crawling to the U.K. government for help.

At the time the feisty former investment banker said he was undaunted by the task that lay ahead. But maybe, just maybe he has become disillusioned about what the FSA can effectively achieve in a world where financial regulation has gone haywire…